ABOUT CITY FI A C S
Why can't the City pay it bill ?
This is th problem: The City is not collecting
enough mo y to pay for all its expenses.
Th current deficit is basically a venue
deficit - in ome th City relied on to th pay
its bills, we simply did not get.
The recession has affected alm t all of our
revenu sources. For instance, income tax,
the City's biggest general fund revenu
source, will produce $17.5 million less than
was budgeted in FY91-92.
The City has also lost funding from th state.
For example the state, facing its own deficit,
has reduced its revenue sharing payment by
$26 million.
Another example is the utility tax. The City
lost between $14 million and $16 million
because of on-going litigation and the re
fusal of some businesses to pay this tax.
,
IGHLIG
SO
92-93 CITY BUDGET PLA
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• Eliminate 1,255 jobs - 400 through layoffs and 855 through attrition.
• Freeze pay of all employees, including Mjor and City Council. All
employees will get a pay cut OR take unpai furlough.
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• Cut non-peak hour bus service.
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• Maintain level of 3,850 sworn police officers; call back laid-off officers.
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• Revamp benefits and reduce cost of city employee health care.
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• Eliminate four City agencies; close City print shop.
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• Increase funds to take down abandoned buildings to 15.7 million.
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sis of the City's budget and developed a
We cannot control the national recession or comprehensive financial plan for Detroit.
the decline in state and federal funding, but , Many of its recommendations are included
Detroit can control its spending. _ in this budget. Many oth rs are still under
review.
How much is the City's deficit?
The City will end this fiscal year (FY July I,
1991-June 30, 1992) with just under a $100
million deficit.
Why has the deficit been reported as
hign as $300 million?
_ Early this year, the City projected a worst
case budget scenario for th 21st Century
Committee using the two-year period of
July 1, 1991 through June 30, 1993. The sce
nario assumed what would happen if the
City did nothing differently. In other words:
• the spending levels for FY 92-93 would
be the same as FY 91-92, .
• expenses such as health care would con
tinue to escalate,
• local income sources such as income tax
would continue to drop,
• state and federal government funding
would continue to shrink,
• and the already anticipated FY91-92 $100
million deficit would be paid off.
If nothing changed, the worst case scenario
projected that the City could face a revenue
shortfall by June 1993 of S26S million dol
lars.
What has been done to change this
fiscal picture?
The Mayor took steps to reduce this year's
deficit. For example, 1,<XXl vacant positions
in the current budget were not filled.
The City is required, by law, to balance its
budget. Next year's budget proposes
changes or cutbacks in every �epartment.
When these recommendations are in place
the FY 92-93 budget will be balancedand
Detroit will be on track to be financially
sound well beyond June 1993.
MAYOR'S 21st CENTURY
COMMITTEE
In February the Mayor appointed the 21st
Century Committee. This, 35-member com
mittee was comprised of leaders from fi
nance, business, labor, industry, law, educa
tion, and the community.
Its members conducted a line-by-line analy-
THE NEW BUDGET
The proposed FY 92-93 budget is a balanced
budget. It is based on two things: the money
the city takes in and the money the city
spends.
Personnel cuts
Personnel costs total 55 percent of the City's
operating expenses. The City cannot balance
its budget without reducing this cost.
The budget prop both layoffs andre
ductions in employee pay. Every City de
partment will be affected. However, if the
City cannot reach agreements with its unions,
the number oflayoffs will increase and other
City services may be contracted out to pri
vate companies.
There will be no police or fire layoffs. The
budget maintains the current level of 3,850
officers. In addition, the City already has
begun to call back those officers laid off last
year .
The budget proposes:
• The elimination ofl,255 positions, includ
ing 400 through layoffs and 855 through'
attrition and hiring freeze.
• A three-year pay freeze for all City em
ployees, beginning July 1.
• Cut in an wage levels or unpaid furlough
days for all employees. .
• A 20.236 percent cut in the Mayor's bud
get, including staff cuts.
• A 20.236 percent cut in City Council's
budget, including staff cuts.
• A reduction in the work week from 40
hours to 37.5 hours, with a parallel de
crease in paychecks. I
• Continuation of partial hiring freeze. .
Health (are Costs
, Our health care costs are out of control. This
year, health care for City employ will cost
more than the City earns in total from its 20
mill gen ral pr perty tax.
In some cases the City's hands are tied. As the
.result of arbitra rs' rulings, the grea area of
d.i.fferencebetweencivilianernpley and uni-
fonned employ is health care ts,
Civilian employees currently pay a co-pay
of more than $1,725 for traditional family
coverage hospitalization insurance. Police
officers and fire fighters pay only $165 p,er
year for identical coverage. The City must
make up the difference each year.
If the employee is a police lieutenant. or
sergeant or equivalent fire command officer,
there is no co-pay. The City must pick up the
entire amount.
The budget proposes:
• The current $2 co-pay on prescriptions be
raised to the industry standard, which is
$5.. '
• Low bid hospitalization allowance for all
employees and retirees to bring equity to
civilian, uniformed, and retired employ
ees hospitalization insurance payments.
City Department Changes
Tosavemoney,thebudgetproposestoelimi
nate some City agencies, reduce some non
essential services, revise fees for certain ser-
vices, and consolidate some functions, )
Bus service would be reduced significantly
during non-peak hours under the proposed
budget. Trash collection, however, would
remain at the same level.
The City's two least active fire companies
would be closed. Fire service will be main
tained and no layoffs will result. Because of
recent arbitrators' rulings, the City was or
dered to reduce the hours every Detroit fire
fighter spends on duty each week. As a
result, today Detroit fire fighters report for
work only seven days a month. That ruling
costs the City almost,$5 million a year.
Dangerous and abandoned buildings would
continue to be removed from city neighbor
hoods under the budget. The budget pro
poses an increase in demolition funds.
Proposed changes:
.·Eliminate four agencies: Council of the
Arts, Civil Defense, City Council Youth
Advisory Commission and City Council
Historical Designation Advisory Board"
• Reduce 140 "rank" titles in police depart-
I ment to patrol officers.
• Close two fire companies. .
• Eliminate off-hour bus service - 1 a.m.-5
a.m. Monday through Friday. On Satur
day, service will run between 7 a.m. - 10
p.m. On 9unday, service will run between
8 a.m.-4 p.m.
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advantag
The bud would:
• finance Cobo Bonds
• u Deficit Funding Bonds
• Change Chrysler Bo ds to General Obli
gation Bonds
uPrivatiz tion" and "R gionalism"
(Comments delivered by Mayor Young during
his budget presentation to City Council).
''We are looking at both approaches in sev
eral different areas. But I think you know my
belief that neither privatization nor regional
ism is some sort of magic panacea for City
problems.
"I want to tell you up front that this budget
does not propose to dispose of any of the
City's assets in a fire sale atmosphere.
"To those outside the City ... let me say we
welcome your concern. But you can best
demonstrate that concern by working with
us ... not by trying to relieve of them.
''Hyouareseriousaboutregionalizingmajor
institutions, you might want to start with the
funding of school systems. in the region.
After all, nothing is more important to our
future than education."
SIGNS OF PROGRESS
• New Chrysler Assembly Plant
Located on East Jefferson, this new plant is a
$1 billion investment in Detroit. It will em
ploy 2,100 workers by this summer.
·General Motors to add workers
GM will resume a second shift at its
Poletown plant in 1993, bringing its
workforce to nearly ,6,000.
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• VA Hospital under construction
Currently under construction, the hospital
will provide 1,500 jobs when it opens in the
Medical Center in 1995.
.86 New Single Family Homes
In June Victoria Park opens, the first new
subdivision of single family homes built in
Detroit in decades.
1992-93 CITY or DETROIT
BUDGET CALEImAIl
IlAYOR'IIUDGET APIa 14 1 A.II.
an COlIQ. tuIIGI:
.... IOHIODCIfCII11Im ., �, ..
ILOCI( QIWn �, ..
IUDGET 1 A.II.
COUNCLIUDQET VOTE 1 A.II.
TUUOAY APM, 14
WEl*IIOAY 11
ntuMOAY APM, "
SATURDAY APM. 11
�Y �
APM,22
21
APM..
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Droartment of
PubUc Infonnation/1992